REPUBLIKA.CO.ID, JAKARTA -- Coordinating Minister for Maritime Affairs and Natural Resources Luhut Binsar Panjaitan said the government would hold discussion with joint operation (KKKS) contractor. The discussion on development of the East Natuna gas block will be held on Wednesday.

The government is set to start development of the block, believed to hold one of the world's largest gas reserves, after years of delay, Luhut said here on Monday. "Our decision is on the framework of cooperation-the execution," he said.

Luhut said the government rejects plan for extension of studies on development of the block estimated to have a gas reserve of 46 trillion cubic feet (tcf). He said development of all oil and gas project having high level of difficulty would carried out with the KKKS system together with the government.

An agreement reached earlier between the government and the consortium of state-owned oil and gas company PT Pertamina, US-based ExxonMobil and Thailand's PTT EP on cooperation contract for East Natuna block was cancelled in September 2016. The consortium asked for time to determine the existence of oil reserve in the block.

So far, there was only one well proved existence of oil reserve in the block estimated at 7,000-15,000 barrels of oil per day (bopd). In July this year, Pertamina president director Dwi Soetjipto said that the evaluation of the block would be carried out after the company had completed a memorandum of understanding (MoU) with the National Iranian Oil Co. (NIOC).

“After signing the MoU, we will carry out an in-depth due diligence study, including on our upstream blocks. Normally it would take four months,” Dwi was quoted as saying. The East Natuna block is located in the Natuna Islands, Riau Islands province. The block holds gas reserve five times larger than the Masela block in Maluku.

However, development of the gas block would require advanced technology and huge investment to separate the gas of the block from high content of carbon dioxide (CO2). The block, previously known as D-Alpha, had a 72 percent content of CO2.

Earlier reports have said exploitation of the gas block would cost between US$20 billion and US$40 billion. Director General for Oil and Gas IGN Wiratmaja Puja said the government wanted that the block could start operation in the next three years. "We have estimated that oil production can start after three years of development. It would start with small production but it is a strategy to expedite development," Wiratmaja said.

The government was optimistic that it could sign the KKKS contract for the East Natuna block by the end of year, he said. The Natuna Islands have seven oil and gas exploitation fields but some of the fields in West Natuna are already depleted.

Ikuti Whatsapp Channel Republika